Correlation Between JPMorgan Nasdaq and FT Vest

Can any of the company-specific risk be diversified away by investing in both JPMorgan Nasdaq and FT Vest at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JPMorgan Nasdaq and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Nasdaq Equity and FT Vest Dow, you can compare the effects of market volatilities on JPMorgan Nasdaq and FT Vest and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JPMorgan Nasdaq with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Nasdaq and FT Vest.

Diversification Opportunities for JPMorgan Nasdaq and FT Vest

0.98

Correlation Coefficient

JPMorgan Nasdaq  FT Vest

Almost no diversification

The 3 months correlation between JPMorgan and FDND is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Nasdaq Equity and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow and JPMorgan Nasdaq is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JPMorgan Nasdaq Equity are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of JPMorgan Nasdaq i.e., JPMorgan Nasdaq and FT Vest go up and down completely randomly.

Pair Corralation between JPMorgan Nasdaq and FT Vest

Given the investment horizon of 90 days JPMorgan Nasdaq is expected to generate 2.13 times less return on investment than FT Vest. But when comparing it to its historical volatility, JPMorgan Nasdaq Equity is 1.39 times less risky than FT Vest. It trades about 0.17 of its potential returns per unit of risk. FT Vest Dow is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,893  in FT Vest Dow on August 30, 2024 and sell it today you would earn a total of  337.00  from holding FT Vest Dow or generate 17.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

JPMorgan Nasdaq Equity  vs.  FT Vest Dow

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Nasdaq Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, JPMorgan Nasdaq may actually be approaching a critical reversion point that can send shares even higher in December 2024.

FT Vest Dow

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FT Vest Dow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Nasdaq and FT Vest

The main advantage of trading using opposite JPMorgan Nasdaq and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Nasdaq position performs unexpectedly, FT Vest can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FT Vest will offset losses from the drop in FT Vest's long position.

The idea behind JPMorgan Nasdaq Equity and FT Vest Dow pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.